US and Japan Conduct First Joint Currency Intervention Since 2011

The governments of Japan and the United States coordinated a major currency intervention on July 31 and August 1, 2026, to support the Japanese yen after it fell to 40-year lows near 164 per dollar. Donald Trump described the joint action as a "signal of friendship" and a benefit to the world economy. The operation, the first of its kind since 2011, involved selling U.S. dollars and euros to buy yen, driving the currency to its strongest levels since May, reaching as low as 155.20 per dollar by August 3.

Japan's Ministry of Finance spent an estimated $52.8 billion on July 30, with total intervention costs reaching up to $58.97 billion. U.S. Treasury Secretary Scott Bessent planned purchases of $5 billion to $10 billion, utilizing the Federal Reserve Bank of New York to sell euros for yen. This unconventional method avoided selling U.S. dollars directly to remain consistent with G20 agreements and strong-dollar policies. To prevent a destabilizing sell-off of U.S. Treasuries, Japan activated the Federal Reserve's FIMA Repo Facility to secure dollar liquidity.

Simultaneously, the Bank of Japan maintained short-term interest rates at 1%, though it signaled potential hikes in September to combat inflation and narrow the yield gap with U.S. assets. Both Satsuki Katayama and Scott Bessent stated they would not hesitate to conduct further joint interventions to counter disorderly market movements. The coordination was driven by mutual concerns over Japanese import costs and the potential for a yen collapse to disrupt the U.S. government debt market.